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NORTH CAROLINA GROUP SUES OVER DELL TAX INCENTIVES

June 23, 2005

The North Carolina Institute for Constitutional Law has sued in a North Carolina court to block $280 million in subsidies and incentives granted to Dell, Inc. for a plant in Winston-Salem.

The suit echoes the Cuno suits percolating through federal courts to challenge tax credits.

There's no telling how this will play out, as far as I can tell. The signs point every which way:

-The Supreme Court today ruled that local governments can seize private property for developers over the objections of the property owners. This would seem to indicate that states can do whatever they please to help powerful interests, including preferential tax treatment. BUT-

-The Supreme Court also has ruled that homegrown marijuana used at home is part of the stream of interstate commerce, and is thus beyond the scope of state control. As the anti-subsidy Cuno decision is based on Commerce Clause law, this would seem to indicate that everything is interstate commerce, and states can't interfere with it via tax policy.

How will it come out? If the recent Supreme Court decisions are a guide, simply bet against what I want. That means you should bet on the corporate welfare tax incentive supporters.

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